A CEO in Washington wants his employees to be happy. And he’s putting his money where his mouth is, slashing his pay by $930,000 so he can give his workers a new minimum wage of $70,000 a year ‒ well above Seattle’s $15 an hour requirement.

Dan Price, the 30-year-old CEO of Gravity Payments in Seattle,
made the announcement to the 120-strong staff on Monday.

“Is anyone else freaking out right now?” Price asked
after the clapping and whooping died down into a few moments of
stunned silence, according to the New York Times. “I’m kind
of freaking out.”

Most of the money will come from Price’s $930,000 pay cut ‒ he’ll
now earn Gravity’s $70,000 minimum wage ‒ but the rest will come
from this year’s expected $2.2 million company profits. He will
keep his income low until the profits are back up to their
current level, he told the Huffington Post.

“There will be sacrifices,” said Price. “But once
the company’s profit is back to the $2.2 million level, my pay
will go back. So that’s good motivation.”

One employee, Alyssa O'Neal, told KING that she will more than
double her current salary.

"To hear those numbers is just, 'Wow’," she said, adding
that she already has plans for what to do with the extra income.
"House, absolutely. I have this goal of being a 21-year-old
homeowner and I'm going to reach that now and I'm stoked."

Hayley Vogt, a 24-year-old communications coordinator at Gravity
who currently earns $45,000, told the NY Times that she has
worried about covering rent increases and a recent emergency room
bill.

“I’m completely blown away right now,” she said.
“Everyone is talking about this $15 minimum wage in Seattle
and it’s nice to work someplace where someone is actually doing
something about it and not just talking about it.”

O’Neal, Vogt and their fellow employees won’t necessarily see all
that income all at once, however. The Gravity raise will be
phased in over the next few years, giving the company time to
adjust its bottom line, KING reported.

Price’s inspiration, according to the NY Times, was a study
published in the September 2010 issue of the Proceedings of the
National Academy of Sciences that found that the higher the
salary ‒ up to $75,000 ‒ the greater an employee’s emotional
well-being.

“Emotional well-being also rises with log income, but there
is no further progress beyond an annual income of [approximately]
$75,000,” Princeton economists Angus Deaton and Daniel
Kahneman wrote in their study.
“Low income exacerbates the emotional pain associated with
such misfortunes as divorce, ill health, and being alone. We
conclude that high income buys life satisfaction but not
happiness, and that low income is associated both with low life
evaluation and low emotional well-being.”

Senator Bernie Sanders, Hopefully, we as a business community can
push for solutions on this issue proactively. Thank you for the
support.https://twitter.com/SenSanders/status/588072389046591490Posted
by Gravity Payments on Tuesday, April 14, 2015

Price was also inspired by friends’ stories of how hard it is to
make ends meet when earning well above $7.25 an hour ‒ the
current federal minimum wage.

“They were walking me through the math of making 40 grand a
year,” he told the NY Times, adding that his friends were
unable to save for unexpected expenses.

“I hear that every single week,” he said. “That just
eats at me inside.”

Price said that he felt it was his responsibility to take a stand
as a business leader, even though his proposal made him
“really nervous.”

“The market rate for me as a CEO compared to a regular person
is ridiculous, it’s absurd,” Price told the NY Times.
“As much as I’m a capitalist, there is nothing in the market
that is making me do it.”

Price started the company, which processed $6.5 billion in
transactions for more than 12,000 businesses last year, in his
dorm room at Seattle Pacific University with seed money from his
older brother, according to the NYT.

“There’s greater inequality today than there’s been since the
Great Recession,” Price told the Huffington Post. “I’d
been thinking about this stuff and just thought, ‘It’s time. I
can’t go another day without doing something about this.’”

Not everyone agrees that increasing the company’s minimum wage is
the right way to increase employee happiness in the long run,
however.

"If you are trying to build a great long-term company, your
employees by definition have to be with you in that
journey," Matt Ehrlichman, CEO of Washington-based Porch,
told KING.

His company believes stock options may be a more valuable
offering for their employees who stick around as the business
grows, he said.